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The Crazy Real Estate Market Can Cause Mental Strain

The Crazy Real Estate Market Can Cause Mental Strain

May 19, 2021

Escalating house prices and ballooning mortgage obligations can be a source of mental strain, writes Peter Watson.

How much is your house worth?

That seems to be a hot topic in southern Ontario these days. In many communities, house prices are escalating rapidly.

Bidding wars can turn into more than an attempt to purchase your dream home. For many, it is a competition.

After being outbid in your last several attempts to buy a house, you are frustrated, confused and sometimes plain out mad. Suddenly things have turned personal.

Some might make an offer for a house at a price level that would have seemed out of reach for them financially even a week earlier.

The focus is on the selling price. That is what we all want to know.

Transaction details are public information. Often news travels faster by word-of-mouth.

In my opinion, the focus should shift to the effect this crazy housing market is having on the buyers of those houses.

Think of a mental anguish a homebuyer goes through. The drama of the purchase; did you overbid?

Suddenly a couple can be looking at their new domain and realizing they have a house mortgage approaching, or over, $1 million. Previously, their most significant financial obligation could have been paying off student debt.

That kind of financial jolt into carrying debt far above their comfort level can be overwhelming.

What happens if interest rates increase when you renew your mortgage? Can you afford to have an unexpected cost of repairing a roof or replacing a furnace?

What happens if someone within the household loses a job or has a significant reduction in remuneration?

Your previous worry of being shut out of the rising housing market has now shifted to the reality of your financial exposure.

That is the new demon that can keep you awake at night.

Home sweet home overloaded with debt can be a nightmare.

Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through